Many industries have been shaped by innovations that leverage technology. The world of e-commerce is no exception to this transformation. Many think tanks and business leaders in the FinTech industry such as Adam Clarke of Macropay constantly evaluate trends within their respective areas. This way, they have a competitive advantage and can continue to stay ahead of any business challenge that can arise from the shifting of the tides.
Let’s look at some of these trends in tech. While some of them are not new, they continue to influence digital payments.
Open Banking
Open banking has been postulated by many experts that traditional banking will be overridden by the surge in FinTech startups. This projection is doubtful as 2022 has thus far been swayed by the integration of eCommerce with a range of FinTech payment gateways.
However, this linked operation between FinTech companies and businesses also relies on financial institutions through the processes of open banking. The benefits of this trend include:
Competitive Advantage and seamless transactions
To stay competitive, banks securely allow third-party institutions access to their database through APIs. This data networking allows users to streamline their online transactions and financial accounts while promoting customer retention in banks. It also provides a common dashboard through which customers can organise their payments through different banks and for different purposes.
Credit score assessment
Open banking can also rely on machine learning models. The benefit of incorporating ML models with open banking is that it can help businesses to assess the credit risk of customers based on their financial history.
Additionally, more alternatives such as personalized interest rates can be granted to customers based on these assessments. ML models can reduce operational costs and automate banking processes. For businesses, open banking offers insights that can influence budgeting and ultimately, optimization of their processes.
Blockchain Technology
Decentralized finance (DeFi) is not the death of financial institutions. It rather strengthens them by leveraging blockchain technology to improve their processes. Financial data recorded on a blockchain cannot be changed and even though it is end-to-end encrypted, the movement and uses of this money are traceable.
This technology secures international payments against fraudsters through its traceability and the checking of errors by the network nodes.
Embedded Finance and Contactless payment
Embedded finance is necessary for businesses as they offer a solid foundation for digital infrastructure to be built on. Payment modes are added to the features of the website or app of non-financial institutions. Beyond the seamlessness and speed of transactions affected by pulling and storing customers’ data in an integrated form, data can be harnessed for a host of functions.
The technology of embedded finance can be utilized in making contactless payments. Customers can pay for services rendered by a vendor on their website or using just their app. They can also obtain credits from these merchants who have incorporated these processes into their businesses.
Adam Clarke of Macropay on Trends
Adam Clarke, Macropay Founder & CEO and an experienced entrepreneur, notes that the tech revolution in finance and banking is yet to reach its peak maturity. There is massive room for technology to address pressing banking concerns for majority of the world population.
The current trends discussed serves as the new foundation for building better financial technologies that benefit the public.
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